Gaming:

It’s a new day at the Stratosphere

Some workers are appreciative, others scared of ‘by-the-book’ managers

Steve Marcus

The sun rises behind the Stratosphere, left, and some Strip properties. The Stratosphere was recently sold to investment giant Goldman Sachs, which went back on its stated intent to keep management intact.

By Liz Benston (contact)

Saturday, Oct. 25, 2008 | 2 a.m.

Tiffany Brown

Bosiljka Jevremovic deals three-card poker Thursday at the Stratosphere. Some dealers complain about wages and strict new management; others say they are more appreciated and slackers aren't getting away with not pulling their weight.

The back story on a pair of leveraged buyouts (1-10-2008)

Sun archives

Headlines from the Vegas gaming industry

A few months after investment giant Goldman Sachs acquired the Stratosphere in February, all casino executives had been terminated or left their jobs.

Cleaning house isn’t unusual after a corporate takeover. But the depth of the purge — many middle managers also were let go — raised eyebrows even among seasoned veterans and has upset many rank-and-file workers, who have flooded an internal complaint hotline with calls and fired off letters to Goldman Sachs’ New York headquarters.

The turnover offers a glimpse of the realities of a takeover during the worst economic downturn in the modern casino era.

In one camp are frightened employees who say their workplace has been transformed into a minefield run by hard-line executives. Morale is low, they say, because of the purge of well-liked managers and because they now fear for their own jobs.

In another camp are employees who see opportunity where others see uncertainty. The new executive team is focused and professional where the previous group was lackadaisical and played favorites, they say. Morale is high among motivated employees, they say, and rule changes are necessary for the Stratosphere to survive.

They detail some unpleasant discoveries made by the new team: One executive was stealing money from the casino, a middle manager was pocketing thousands of dollars from non-English speakers in exchange for jobs as casino dealers, and a couple of dealers were falling asleep on the job.

Billionaire financier Carl Icahn sold the Stratosphere to Goldman Sachs’ Whitehall Street Real Estate Funds after interest from Whitehall blossomed a couple of years ago. Unfortunately for Whitehall, which acquired Icahn’s American Casino & Entertainment Properties in February, the timing couldn’t have been worse.

Icahn exited before the first major warning signs of a consumer recession. He made nearly a billion dollars on the $1.3 billion sale, announced at the height of an investor feeding frenzy fueled by cheap credit.

Located north of the Strip, the Stratosphere was profit-challenged from the get-go. It filed for bankruptcy months after its 1996 opening and Icahn gained control in 1998.

The Stratosphere rode the tourism boom, benefiting from a $75 million expansion in 2001 that added 1,000 rooms and some amenities. Before the economic slump, the Stratosphere was filling rooms, and therefore, its casino, restaurants and shows, at record rates.

Whitehall executives told members of the state Gaming Control Board in January they would be keeping American Casino’s management team intact. Whitehall will be “relying heavily” on then-American Casino Chief Executive Richard Brown and Chief Financial Officer Denise Barton “as well as the rest of the ACEP team for their gaming expertise, as we are not traditional gaming operators,” Stuart Rothenberg, a managing director of Goldman Sachs and chairman of Whitehall’s investment committee, said at the licensing hearing.

Shortly after the deal closed, the new executives held a meeting with Stratosphere employees, telling them their jobs were safe.

Managers and workers interviewed by the Sun said they were nervous about the takeover, as any change can mean layoffs. But the feeling seemed to be more nervous optimism than doom.

“We thought maybe the new guys would spend some more money around the place,” said one employee, who requested anonymity.

But the axes were falling.

Brown, the chief executive, left the company in early April and Barton, the chief financial officer, was terminated in September. Frank Riolo was appointed president of American Casino in late April. Riolo had most recently run the Viejas Casino near San Diego and other business ventures for the Viejas tribe, including a retail center, nongaming hotels and a bank.

Riolo appointed a vice president of gaming operations, Keith Pakish, who had that title at the Viejas Casino.

Some new managers were brought in from outside the gaming industry, including Arthur Keith, a former general manager of the Gaylord Opryland Resort & Convention Center in Nashville.

The axes fell especially hard in the table games department, a group that had generated a respectable business considering the Stratosphere’s less-than-ideal location and bargain-seeking customer base. The new executives terminated five of six shift supervisors. The sixth resigned in protest.

“All we did was make that company money. If we were good enough for Carl Icahn, who’s a tough boss, why weren’t we good enough for them?” said one ex-supervisor, who requested anonymity.

Most were over 60 and had worked at the Stratosphere since opening day. None has found a job elsewhere.

“They threw us out at the worst possible time, without warning and for no reason,” one supervisor said, calling their severance of one month’s salary “insulting” given their years of service.

Stratosphere officials said the executive and management turnover wasn’t to cut costs, as they have hired about the same number of people as replacements.

The gaming industry as a whole watched nervously as New Jersey regulators in December yanked the license of Tropicana Entertainment for, among other things, laying off key employees without warning. Although Nevada regulators give casinos more latitude, companies have reason to watch their actions more closely these days.

Nevada Gaming Control Board Chairman Dennis Neilander said the Stratosphere has broken no gaming laws here and isn’t under suspicion for breaking promises that managers would keep their jobs.

Because casino buyers can only take control of a property after they are vetted by regulators, buyers can’t be expected to know whether they will make such decisions until after they have been approved for a gaming license, Neilander said.

Some dealers said they go to work afraid they will be fired, as their bosses were. It’s hard to get through a workday, dealers said, when they are earning only about $50 a day during the week and little more on weekends.

“I’m looking for a new job, but nobody’s hiring dealers from the Stratosphere,” said one dealer who requested anonymity. “We’re getting written up for every little thing.”

They have been told to deal faster and to smile and converse with customers. They must clock in exactly seven minutes before their shifts start. Dealers who speak little English are attending mandatory English classes.

Some welcome the changes, accusing the old management team of favoritism and carelessness.

“This company plays by the book,” said Brian Jacobs, an assistant shift manager, referring to Goldman Sachs. “There’s a reason those (former employees) are not here anymore.”

“Now, everyone is treated the same,” said Michelle Yoachum, a floor supervisor. “There are employees who aren’t giving 100 percent who were getting a free ride.”

The new managers are on the floor more often, watching workers more closely but also complimenting them for jobs well done, she said.

There are other changes as well, including new roulette games and automatic chip sorters. There are new tables, felts and chips — an improvement over tables that were noticeably stained with sweat and alcohol and had pieces missing from their padded edges.

Dealer Sandi O’Day said the changes are forward-thinking and make her more excited about going to work.

“This is the best management we’ve had in a long time,” she said.

Assistant shift manager Ian Choi said he decided to return to the Stratosphere after having left the property six years ago as a dealer.

“People said, ‘Why do you want to go work down there? That’s a break-in house.’ But I was pleasantly surprised. The property looks much better.”

Meanwhile, some said this strait-laced culture is also turning off customers who are gambling elsewhere.

“They’ve run off our good players, our regulars,” one dealer said. “Management says they want to improve things, but the more we do these things, the fewer players I see coming in.”

Discussion: 18 comments so far…

By neiman1

10/25/08 at 8:50 a.m.

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You cannot run a casino this way. To actually expect workers to do what's expected. To speak English is way to strict a requirement. What would happen if they actually checked against immigration records and only employed legal residents. How can anyone survive when work rules are enforced?
By homer

10/25/08 at 11:20 a.m.

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Here comes the local gaming official neiman1. He will tell everyone just how gaming works although he no has idea how gaming works. His main goal is to insult and provoke others who post or rant about an article that does not agree with his exact point of view.
I have worked in gaming for years.For instance he once mocked people who posted about slot/poker machines not paying like they use to. He has no idea casinos could install computer chips that will make payouts less frequent,thus people lost their money faster. My guess is neiman1 does not work and has not worked in gaming.
If there are illegal immigrants working he can thank Bush and McCain for not enforcing our borders. McCain says we should welcome illegals "they are Gods children".
His main focus is Harry Reid and lets drill now, meaning Reid is responsible for the energy crisis. He fails to think about the eighty-plus thousand acres of land big oil can drill on now but won't, or if someone drills today and finds oil it will be years before a drop of oil is refined.
By misterbig

10/25/08 at 12:05 p.m.

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all the people that were terminated needed to be terminated. the stratoshere was the worst run casino i've ever been involved with. the people complaining never had a real casino job or were the princesses of the place. there are dealers there that can't speak or read a word of english. they're not running people off things are slow because of the economy and other things.
By wannabe1indc

10/25/08 at 4:18 p.m.

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I visited the Stratospere on several different ocassions in 2008 and let me tell you..what may not come as a shock to those who have visited it.

THIS PLACED SUCKED! LITERALLY THE WORSE STRIP CASINO THAT I HAD/HAVE BEEN TO. I WOULD GO AS FAR TO SAY THAT SLOTS A FUN IS/WAS A BETTER PLACE.

Good Luck to the new management team and I will see you the next time I am in Vegas. As a cash spending customer there, it would have been nice to have people speak English and then I remember how dirty all the machines and bathrooms were. I can't wait to see it now.

Dave
By stevem

10/25/08 at 5:19 p.m.

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if you can get a window seat at the restaurant at the top, it's a pretty pimp place to take a date. other than that..it's a dump.
By NevadaFive

10/25/08 at 7:14 p.m.

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can that tower withstand an 7.5 mag earthquake? I highly doubt it.
By weightwatcher

10/26/08 at 8:24 a.m.

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I beg to differ with the tone of this article. I question if the writer had the article massaged by The Greenspuns who do a lot of events at The Stratosphere, including sponsoring CineVegas which had a party with the casino a few years back.

The food and beverage department is not currently a product of new management getting rid of employees who are not doing their job. Instead they are creating a tolerant environment for discrimination towards the elderly and the disabled. Highgate (which is a co-owner and never mentioned) as well as Goldman Sachs have a hitler like management style. They use racial slurs on a constant basis.

As far as getting rid of management and employees who were causing harm, or were favorites, to the regime- that is a lie. There are two managers in the catering office who are part of the old regime and if Goldman Sachs was really cleaning house related to employees who were bad news, these two would be gone. I have watched the catering department go through over 8 employees because of their director.

I have watched one girl have a seizure at work and told by that same director to "get back to work". No one called paramedics to help. I put my resignation in a month later. I felt I was forced to put my resignation in too because I refused to let my catering director use and abuse me. I know numerous people who called the 800 line and went to HR to complain against the catering manager and catering director and nothing was done. If Goldman Sachs was really cleaning house, wouldnt they look at this statisc? I know for a fact these two woman are continuing their tactics and horrible treatment of the people in their office. Did this reporter even check with HR? Did she go to each department and talk to other employees? Or is Greenspun thinking of hosting another event with the catering office? I know that nothing is being done and people who still work in catering are fearful not only because of these two women but because of the economy and lack of jobs and ability for the non-managers in that office to get out of the situation on their own.
When I worked there HR did nothing about the complaints.Three of us went to HR as a team to complain about the catering director. Results. She is still there, two of us are not. Felt forced to resign or be treated like subhumans. I was forced to quit due to stress.

Too bad the reporter missed all this, but then again Greenspun is in their back pocket!
By insidelookingout

10/27/08 at 1:54 p.m.

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I have worked at the Strat for many years and can honestly tell you there isn't one decision the new ownership and management has made with respect to layoffs that I can disagree with. Morale is low because well-liked managers were let go? Pleeeeeease! These people were not good managers!No one was being held accountable for anything before! Now employees are expected to be friendly to guests, smile and speak English? Oh, and know how to perform their jobs? Um hello? Is that really asking too much? The new management is definitely more friendly and competent. I haven't heard yelling around here since the "old management" was cleaned out. Goldman Sachs and Highgate came in, evaluated each department carefully and made business/employment decisions that were LONG overdue! Anyone that is "frightened" of losing their job should be. Obviously they're not doing their job well or are not qualified. Be grateful you have a job in this economy and quit your whining. Put a smile on your face and be friendly to our guests. Isn't that what's all about? Showing tourists a good time when they are on vacation? Keep up the great work Frank & team!
By lvbigbear

10/28/08 at 2:20 p.m.

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Liz your lack of research has disappointed me... "Some new managers were brought in from outside the gaming industry, including Arthur Keith, a former general manager of the Gaylord Opryland Resort & Convention Center in Nashville."

Arthur Keith is a seasoned gaming veteran, prior to managing the Gaylord he spent many years working for Harrahs, when he left Vegas a few years ago he was VP of Hotel Ops at The Rio. My friends who have worked for him found him to be honest and caring and a great boss.
By vshough

10/28/08 at 2:53 p.m.

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My wife and I have been traveling to Vegas numerous times a year for the last 10 years and stay at the Stratosphere every time. They have always been accomodating, and we are disappointed to hear that dealers, pit bosses, and casino hosts that know us by name might be gone. I do agree that there are dealers that need to be gone, but am anxious to see if the changes are positive, and hopefully we will be able to continue to frequent the strat!! We have never had a bad experience in 10 yrs......
By chrisdice

10/29/08 at 6:29 p.m.

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All i can say is now i know why there are UNIONS.I hope these DEALERS sign up and get somebody to look out for them. I heared from many people in this business that this is a very bad management team.Just go and ask the TABLE GAMES EMPLOYEES AT THE LUXOR.
By bjbigplayer

10/31/08 at 7:50 p.m.

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Stratosphere could use a management change. Tell them to buy Bill Zender's new book on casino management when it comes out in 3 weeks.
By kloerwald

11/2/08 at 11:35 a.m.

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I have to disagree with those who say it's a dump. Lady Luck was a dump; Stratosphere is nowhere near being a dump. I visit several times a year and they have kept the Stratosphere affordable for the middle class visitors. The Circus Circus, Riviera, Sahara, and Stratosphere are a few of the places on the strip that are affordable.
I am glad to see new management has taken over and cleaning the employees up. I for one do not like playing the table games with dealers that cannot speak English. Employees in that position "Must Be Expected To Speak English"!
Keep it up Stratosphere"I will continue to visit as long as you keep the rooms affordable.
By captainpuffin

11/3/08 at 7:30 p.m.

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I want to say this hotel is a joke! I did work for The Strat under Ichan. Speaking of their catering department is it standard practice to hire children of stars who get special treatment?

I did not play politics and I always got a bad shift. I wish this reporter did her homework. Maybe she is in bed with the LVCVA. I know most of their freshly made managers are!
By captainpuffin

11/4/08 at 4:49 p.m.

Comment removed by staff.
By proudmama

11/14/08 at 1:44 p.m.

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I agree. The special treatment of Nikki Sixx's daughter has concerned me from the day Sixx ate at Top of the World. If she is so special why is she working?!?! I think they are sleeping together.
By lvguy

3/5/09 at 10:37 a.m.

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So let's see what they have done this week.

Well they have fired dealers and other employee's, just the benefits to the remaining ones.

The new casino management doesn't seem to have a clue, for some reason the have it in their heads that they are the Wynn and people will flock to them, umm no guys, sorry it's still the Strat.

When I was there we had one player in the whole place, a nice guy playing $500 on our single zero roulette wheel, he left after he was told by the shift manager that his wife could not sit at the table.

Yes their were some employee's that should of been gone before all this, however when managements hands are tied by the HR dept. there isn't a whole lot that can be done, but the people that came in to run table games now, wow, they have no clue what they are doing.

After 9/11 we did no lay off, we stayed busy, why because Carl understood that the Strat is a bargain joint, take care of the guests and they will come back, well I have seen none of our old regulars in the last 3 months, they were used to the bosses being friendly, not standing on the edge of the table sweating the money and making them feel unwelcome.

The one good thing I will say, i did learn something, our shift boss would give us pep talks before shift, not about gaming or customer service but about silly things, like why the sky is blue....Yeah ok....Great thanks.

Seriously, I am sorry to see what has happened to the place and my friends that have worked there or still do, I wish the ones still employed good luck, they are going to need it.

Lastly, Felini's is still great
By coburgsavoyman

6/21/09 at 10:48 a.m.

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insidelookingout, you are wrong in your words: "I worked at the Strat for many years and can honestly tell you there isn't one decision the new ownership and management has made with respect to layoffs that I can disagree with.
-----------------------------

Apologies for slapping myself on the back but facts are facts. I worked hard, I had a perfect attendance record, I was never absent, and was loyal. There was nothing anywhere to even hint that I less than an excellent employee at the Stratosphere. And yet, I was laid off along with others in early March.

If you disagreed with nothing the new managers have done, you aren't paying attention.

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